On many conservative blogs, people are more or less resigned that Barack Obama is going to win. However, there's often a retort that Obama will be a disaster, and the Republicans will come roaring back in 2010 and 2012. After all, it happened in 1994. Many conservatives seem to think it'll be good for the Republicans to be back in the wilderness, so they can remember that they're for smaller government, tax cuts, etc.
I just want to point out a few flaws with this argument.
The Democrats should be able to deflect any blame for an economic mess. After all, they'll be able to argue that it started when George Bush was president. Even if the Democrats put in disastrous policies (and they probably will), it's going to be very hard to pin a bad economy on them. They can implement higher taxes, forced unionization, cap-and-trade, restrictive regulation, windfall profits tax, and so on, and after the economy tanks and unemployment rises, they can blame the previous administration and maybe big corporations.
The Republicans at this point don't seem to have an inspiring leader like Newt Gingrich was in 1994. They look set to elect the same group to the leadership as they've had for a while. Conservatives may have a lot of good ideas, but the Republican party leadership hasn't seem interested.
The Democrats are going to implement several new policies that will help them secure a future advantage. These include implementing Card Check to end secret ballot voting for unions; elimination of the right-to-work law provision in Taft-Hartley, and reimposition of the Fairness Doctrine. This will ensure a steady stream of union dollars, and it'll stop a lot of conservative talk radio. They'll also likely advocate same day registration and voting. Felons could be granted the right to vote, and illegal immigrants could be granted citizenship.
If Obama wins, there's no guarantee he's a one term President. On election night in 1994, when Republicass were sweeping the nation, it seemed nearly impossible that Bill Clinton would get reëlected. Yet he did, quite handily. Even Jimmy Carter was close in the polls until the very end. The power of incumbency is quite powerful. There's also no guarantee that the Republicans would choose a good nominee. After all, the Republicans chose Bob Dole in 1996.
Remember, the things that upset you aren't necessarily the things that upsets the "Joe Sixpack" voter. I presume that the Democrats aren't stupid enough to try some sort of widescale gun confiscation or an "assault" weapons ban. And despite the efforts of George Miller, the Democrats won't nationalize 401K plans. And they won't demand America stop burning coal (although if they did, the Senate and House switchboards would not be lit up because there'd be no electricity). They'll raise taxes, but not to 70%. Capital gains taxes will hardly matter since no one has capital gains.
Obama could really screw up in foreign policy, which would be harder to pin on George Bush. Especially if he deploys troops to a new theater and one tht has minimal strategic interest for the United States.
He could put some disastrous energy policies in place that result in brownouts or gas lines. But he won't. He's got some smart people working for him.
Although we live in a right-of-center nation, there's no guarantee that Obama would definitely lose in 2012 or that the Democrats would suffer big losses in 2010. Sure, in 2010, they might lose some traditional Republican seats they managed to win (that looks like it will even happen in a couple of seats this year), but remember that the Dakotas keep electing Democrats to the Senate even though both states are overwhelmingly Republican.
It's looking like it's going to be very difficult for McCain to win. Let's hope the Republicans can win enough Senate sets to maange filibusters of the craziest Democratic attempts.
Tuesday, October 21, 2008
Wednesday, October 08, 2008
Why is Cheap Housing a Problem?
Many Republicans and Democrats seem to think that a major problem is that houses have gotten too cheap.
Sure, it's not great for people that bought a house at a higher price, but now have negative equity. However, those people still have the same house that they had before, and they presumably have the same mortgage they had before. So their mortgage payments should be the same (unless they decided to play the rate game and get an adjustable rate mortgage, but with rates down, that shouldn't be a major problem). So if they were comforable paying $1,000 a month two years ago to live in a house, they should be comfortable with that same amount today, no?
Now, it really sucks for those people who have to, for whatever reason, relocate. But even then, what matters is not that you sell your house for a loss, but what the differential between houses is. So if the region of the country you lived in goes down a lot, but you have to move to a region where prices haven't collapses as much, that makes you worse off. But that has to be a relatively small subset of the population.
Sure, if housing prices drop, you can no longer use your equity as a piggy bank for a home equity line of credit. But that was all paper gains anyway.
So whom do falling house prices really hurt? Those people that bought houses they couldn't afford (either to live in or do speculate with), and who were hoping to refinance later and take out equity. I'm sorry, that's just so damned irresponsible on so many levels. So we try to keep housing artificially expensive so that people who couldn't really afford their houses and put in little or no equity can stay in them?
About 15 states have a crazy law that says if you walk away from your negative equity house, the bank can't come after your other assets. So these people can move across the street into an identical house, cut their mortgage, and leave the bank holding the bag.
Who benefits from falling housing prices? Well, for one, young people. If you just graduated college, I'd imagine that given the choice, you'd rather have cheap houses than expensive houses. If people can spend less money on their mortgage, they can spend more money on everything else. In our society, we like everything else to get cheaper. No one laments when cars get cheaper, or when personal electronics get cheaper. No one promises to do something about falling oil prices. (Weirdly, however, the government does keep some food prices artificially high, but I'm sure most Americans don't realize this).
Yes, I own a house and I have a mortgage. But even with falling prices, I have the same house and the same mortgage. So I'm really only worse off if I prepare an internal balance sheet of my net worth...
Sure, it's not great for people that bought a house at a higher price, but now have negative equity. However, those people still have the same house that they had before, and they presumably have the same mortgage they had before. So their mortgage payments should be the same (unless they decided to play the rate game and get an adjustable rate mortgage, but with rates down, that shouldn't be a major problem). So if they were comforable paying $1,000 a month two years ago to live in a house, they should be comfortable with that same amount today, no?
Now, it really sucks for those people who have to, for whatever reason, relocate. But even then, what matters is not that you sell your house for a loss, but what the differential between houses is. So if the region of the country you lived in goes down a lot, but you have to move to a region where prices haven't collapses as much, that makes you worse off. But that has to be a relatively small subset of the population.
Sure, if housing prices drop, you can no longer use your equity as a piggy bank for a home equity line of credit. But that was all paper gains anyway.
So whom do falling house prices really hurt? Those people that bought houses they couldn't afford (either to live in or do speculate with), and who were hoping to refinance later and take out equity. I'm sorry, that's just so damned irresponsible on so many levels. So we try to keep housing artificially expensive so that people who couldn't really afford their houses and put in little or no equity can stay in them?
About 15 states have a crazy law that says if you walk away from your negative equity house, the bank can't come after your other assets. So these people can move across the street into an identical house, cut their mortgage, and leave the bank holding the bag.
Who benefits from falling housing prices? Well, for one, young people. If you just graduated college, I'd imagine that given the choice, you'd rather have cheap houses than expensive houses. If people can spend less money on their mortgage, they can spend more money on everything else. In our society, we like everything else to get cheaper. No one laments when cars get cheaper, or when personal electronics get cheaper. No one promises to do something about falling oil prices. (Weirdly, however, the government does keep some food prices artificially high, but I'm sure most Americans don't realize this).
Yes, I own a house and I have a mortgage. But even with falling prices, I have the same house and the same mortgage. So I'm really only worse off if I prepare an internal balance sheet of my net worth...
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